Balance Of Payments Crisis Looming

The risks of a full-blown balance of payments crisis in Egypt are steadily building. Indeed, the economy's external position is becoming increasingly precarious amidst the ongoing trend of weak capital inflows and declining foreign currency reserves. Latest data from the central bank (which covers the period July-September 2011) is hardly inspiring, particularly given our view that the situation has deteriorated further since early October amidst the renewed spike in large-scale public protests.

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